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Today's modest pullback by Google Inc (NASDAQ:GOOG - 808.68) has one group of option players eyeing additional downside through week's end. Specifically, around 1,500 contracts have traded at GOOG's weekly 4/5 810-strike put for a volume-weighted average price (VWAP) of $4.37. The majority of these contracts have crossed at the ask price, and implied volatility was last seen higher, pointing to the initiation of new bearish bets.
By purchasing these now in-the-money puts, traders expect Google Inc (NASDAQ:GOOG) to remain below the $810 mark through the close on Friday, when the weekly options expire. More specifically, breakeven for the contracts is $805.63 (strike price less the VWAP), or just a chip shot away from current levels. Risk, meanwhile, is limited to the initial premium paid.
Expanding the sentiment scope reveals GOOG has seen a flurry of buy-to-open put activity in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.98 ranks in the 86th percentile of its annual range. In other words, puts have been bought to open over calls with more rapidity just 14% of the time within the last year.
Echoing this bearishly skewed bias is the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.19. Not only does this show that put open interest outweighs call open interest among options expiring in three months or less, but it ranks higher than 96% of other such readings taken over the past 52 weeks. Simply stated, short-term speculators have rarely been more put-heavy toward GOOG during the last 12 months.
As touched upon, the stock is trading around 0.5% lower in today's session. From a longer-term perspective, though, Google Inc has done well on the charts, with the stock up roughly 27% from its mid-November low of $636. In light of the stock's withstanding technical prowess, this recent uptick in put volume could simply represent shareholders protecting their profits against any additional downside in the very near term.
On the fundamental front, Reuters reported this morning that Google Inc (NASDAQ:GOOG) will release the latest iteration of its Nexus 7 tablet sometime around July. The tablet will be powered using QUALCOMM, Inc.'s (NASDAQ:QCOM) Snapdragon processor.